White sugar hits record high on strong demand

London, January 7, 2010

White sugar futures hit a record high for a seventh straight trading session on Thursday and dealers predicted further rises through $750 a tonne soon driven by increasing import demand by top consumer India.

Raw sugar nudged close to a 29-year high on prospects for strong demand by key markets, including Indonesia, Egypt and Pakistan.

"The amount of pent-up import demand out there suggests there's not enough sugar to go around," said Kona Haque, commodity strategist with Macquarie Bank.

"Softs are always seen as a hedge against the dollar." Previous talk of a sharp winding down of the main cocoa crop in top producer Ivory Coast appeared to be over-stated.

"So far we're not seeing a rapid tail-off," Haque said.

However, broker Sucden said it saw potential for further cocoa price rises.

"Signs for a drive northwards still remain on Liffe, at least with the path of least resistance continuing in our view to be to the upside," Sucden said in a daily market report.

Cocoa arrivals at ports in top grower Ivory Coast reached 565,122 tonnes in the season to December 27, up from 515,678 tonnes in the same period a year ago, according to data from the Coffee and Cocoa Bourse (BCC) obtained by Reuters.

ICE March cocoa futures fell $15 or 0.46 per cent to $3,277 per tonne, while Liffe May cocoa was down 1 pound or 0.07 per cent to 1,380 pounds per tonne in light volume of 1,053 lots.

In coffee, dealers said tight market conditions underpinned futures prices, due to quality concerns and Brazilian government purchases from local growers under an options scheme.

March arabicas fell 0.6 cent or 0.42 per cent to $1.41 per lb.

Robusta coffee futures on Liffe edged down with March falling $1 at $1,380 a tonne in slim turnover of 1,053 lots. – Reuters